Transplantation studies in rodents indicate that following injury, organs can be repopulated by precursor cells recruited from bone marrow, suggesting considerable plasticity of marrow-derived stem cells in the adult. Identification of a totipotent uncommitted stem cell population in human bone marrow would be of enormous clinical benefit for regeneration of injured organs including the lung, and suggests the possibility for repopulation of the pulmonary alveolar epithelium following injury by exogenously administered immunologically compatible stem cells. The objective of this proposal is to define human stem cell populations and implantation environments that generate lung alveolar epithelial cell phenotypes, with the long-range goal of improving alveolar reepithelialization and restoration of lung function following injury. We hypothesize that: 1) specific subsets of marrow-derived human stem cells have different lineage potential determined by the lung microenvironment when transplanted into mice in vivo or when cultured in vitro, and 2) human stem cell engraftment in the lung and differentiation towards an alveolar epithelial phenotype in vitro and in vivo is enhanced by growth factors known to be released locally following lung injury. Capitalizing on our combined expertise in stem and alveolar epithelial cell biology, availability of established xenograft models for human transplantation and in vitro systems for alveolar epithelial cell culture, we will investigate these hypotheses by addressing the following Specific Aims: 1) Investigate the ability of fractionated human stem cells to repopulate the distal lung epithelium of immune deficient mice following lung injury and 2) Analyze in vitro the effects of microenvironment on differentiation of fractionated human stem cells. The proposed studies will investigate the capacity of defined populations of human marrow-derived stem cells (mesenchymal plastic-adherent vs. hematopoietic non-adherent) to repopulate the injured alveolar epithelium, and compare the efficiency of intravenous vs. intratracheal administration. A combination of in vitro and in vivo approaches will be applied to evaluate factors (e.g., hepatocyte growth factor and keratinocyte growth factor) in the local lung milieu that augment human stem cell recruitment or induce differentiation towards a distal lung epithelial phenotype. Identification of an adult human stem cell population with the ability to generate differentiated cell types would offers extraordinary therapeutic potential for repair of the lungs (and other organs) following injury.